The growth of the real estate corporate bond market in Vietnam: the role of investor sentiment

Abstract

PurposeThis paper aims to examine the effects of investor sentiment on the development of the real estate corporate bond market in Vietnam.Design/methodology/approachThe research uses an autoregressive distributed lag (ARDL) model with quarterly data. Additionally, the study employs Google Trends search data (GVSI) related to topics such as “Real Estate” and “Corporate Bond” to construct a sentiment index.FindingsThe empirical outcomes reveal that real estate market sentiment improves the growth of the real estate corporate bond market, while stock market sentiment reduces it. Also, there is evidence of a long-run negative effect of corporate bond market sentiment on the total value of real estate bond issuance. Further empirical research evidences the short-term effect of sentiment and economic factors on corporate bond development in the real estate industry.Research limitations/implicationsDue to difficulties in collecting data, this paper has the limited sample of 54 valid quarterly observations. Moreover, the sentiment index based on Google search volume data only reflects the interest level of investors, not their attitudes.Practical implicationsThese results yield important implications for policymakers in respect of strengthening the corporate bond market platform and maintaining stability in macroeconomic and monetary policies in order to promote efficient and sustainable market development.Social implicationsThe study offers some suggestions for regulators and governments to improve the real estate corporate bond market.Originality/valueThis is the first quantitative study to examine the effect of sentiment factors on real estate corporate bond development in Vietnam.